ARUNA OSWAL versus PANKAJ OSWAL & ORS.

ARUNA OSWAL versus PANKAJ OSWAL & ORS.

Because respondent No.1 held only 0.03% acquired after filing the civil suit and claims the remainder by inheritance which is the subject of a pending civil partition suit, and because nomination under section 72 prima facie vests the securities in the nominee, the claim required to reach the 10% threshold under section 244 could not be determined in company proceedings; the company petition under sections 241/242 was therefore not maintainable and the NCLT/NCLAT orders holding otherwise were set aside, with directions to drop the company proceedings and liberty to file afresh if civil suit results in sufficient shareholding.

Parties
Appellant / Nominee and Registered Holder: Aruna Oswal; Respondent No.1 / Petitioner in Company Petition: Pankaj Oswal; Respondent No.2 / Company: Oswal Agro Mills Ltd.; Respondent No.16 / Company: Oswal Greentech Ltd.
Jurisdiction
India
Judgment Date
06 July 2020
Procedural Posture
Civil Appeal / Appeal Against NCLAT Order Upholding NCLT Maintainability Decision
Outcome
Appeals allowed
Legal Topics
Oppression and Mismanagement, Maintainability, Nomination, Inheritance, Partition Suit, Locus Standi, Section 244 Waiver
Company Law Civil Law Succession Law Oppression and Mismanagement Maintainability Nomination Inheritance Partition Suit +2 more

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Parties

Aruna Oswal

Appellant / Nominee and Registered Holder

Pankaj Oswal

Respondent No.1 / Petitioner in Company Petition

Oswal Agro Mills Ltd.

Respondent No.2 / Company

Oswal Greentech Ltd.

Respondent No.16 / Company

Procedural Posture

Civil Appeal / Appeal Against NCLAT Order Upholding NCLT Maintainability Decision

Legal Issues

  1. 1 Whether respondent No.1 can maintain a petition under sections 241/242 of the Companies Act, 2013 without holding the 10% shareholding required by section 244
  2. 2 Effect of nomination under section 72 of the Companies Act, 2013 on rights of legal representatives and on maintainability
  3. 3 Whether a pending civil suit on inheritance/partition precludes NCLT from adjudicating the company petition

Ratio Decidendi

Because respondent No.1 held only 0.03% acquired after filing the civil suit and claims the remainder by inheritance which is the subject of a pending civil partition suit, and because nomination under section 72 prima facie vests the securities in the nominee, the claim required to reach the 10% threshold under section 244 could not be determined in company proceedings; the company petition under sections 241/242 was therefore not maintainable and the NCLT/NCLAT orders holding otherwise were set aside, with directions to drop the company proceedings and liberty to file afresh if civil suit results in sufficient shareholding.

Court Disposition

Appeals allowed

Orders

  • Orders of NCLT and NCLAT holding the company petitions maintainable are set aside
  • Proceedings filed before NCLT under sections 241 and 242 of the Companies Act, 2013 are directed to be dropped